Oil prices fall 3% with no real change in fundamentals

• WTI crude fell 3.78% to $66.11 a barrel on Tuesday morning.
• Brent fell below $70 a barrel for the first time since 2021.
• The fundamentals have not changed to justify a big drop in price.

Oil prices fell again on Tuesday – by more than 3% on the day – indicating a dramatic shift in fundamentals or some geopolitical tension in the oil-rich Middle East. Only none of those things happened – at least not today.

At 10:30 a.m. EDT on Tuesday, the price of Brent crude fell $2.33 (-3.24%) to $69.51, the lowest price in years. WTI crude fell $2.60 (-3.78%) to $66.11 a barrel.

But the fundamentals haven’t changed to justify such a price drop. The API has not released any figures, nor has the EIA. The world’s largest oil consumer, the United States has not released meaningful economic data, for better or for worse.

The only relevant data indicator released today is customs data on China’s exports, published by Reuters, which rose at a brisk pace in August as manufacturers moved to brace for future tariffs. China’s imports were a disappointment, however, rising just 0.5 percent instead of the 2 percent expected, and a smaller increase than the previous month.

Later today, the American Petroleum Institute will provide its estimate of movements in crude oil and petroleum products in the United States inventory. Tomorrow, the Energy Information Administration will provide its estimate for the same.

Brent crude is now trading down $4 from the same time last week, with WTI trading up $4 week-over-week.

Earlier this week, Morgan Stanley cut its forecast for Brent crude oil for the second time in two weeks, now expecting an average of $75 a barrel in Q4 – a serious drop from its August forecast for Q4 of $80, comparing the trend in Brent prices to “other periods of considerable weakness in demand”.

By Julianne Geiger for Oilprice.com

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